Oil trimmed its fourth weekly gain after U.S. Federal Reserve policy makers signaled they may end a stimulus program this year, raising concern the economic recovery may falter in the world’s biggest crude user.
Prices dropped as much as 0.9 percent, trimming crude’s weekly increase to 1.4 percent. Members of the Federal Open Market Committee said they will probably end their $85 billion monthly bond purchases sometime in 2013, according to minutes of its latest meeting released yesterday. The U.S. unemployment rate may have held at 7.7 percent, the lowest since December 2008, according to the median forecast of economists surveyed by Bloomberg ahead of a Labor Department report today.
“The FOMC minutes made it clearer that the path to reduce stimulus is there,” said Jonathan Barratt, the chief executive officer of Barratt’s Bulletin, a commodity newsletter in Sydney. Some investors “have used this as an excuse to sell oil overnight,” he said.
West Texas Intermediate oil for February delivery fell as much as 85 cents to $92.07 a barrel on the New York Mercantile Exchange and was at $92.17 at 4:11 p.m. in Singapore. Futures closed 20 cents lower yesterday after climbing to $93.12 a barrel Jan. 2, the highest settlement for a contract nearest to expiration since Sept. 18.
Brent crude for February settlement slid 64 cents, or 0.6 percent, to $111.50 a barrel on the London-based ICE Futures Europe exchange yesterday. The North Sea crude was $19.31 more than WTI, compared with $19.27 yesterday. Trading volume in WTI was 7 percent above the 100-day average, while Brent was 82 percent higher.
Oil is declining in New York as a technical formation signals buying interest is waning after a rally at the start of this week, according to data compiled by Bloomberg. Futures yesterday closed 1 cent a barrel above the opening price, creating a cross-shaped candlestick known as a “doji.” Prices changed direction after a similar pattern on Dec. 24. Crude has chart support along its 200-day moving average, around $91.76 today.
The Federal Reserve committee members were split on how long the bond purchases should last. Participants who provided estimates were “approximately evenly divided” between those who said it would be appropriate to end the purchases around mid-2013 and those who said they should continue beyond that date, according to the record of the FOMC’s Dec. 11 to Dec. 12 gathering released yesterday in Washington.
The industry-funded American Petroleum Institute yesterday reported U.S. crude inventories dropped 12 million barrels last week to 358.5 million. The Energy Department is scheduled to release its weekly report today, two days later than usual because of the New Year’s holiday.
The government report may show oil stockpiles fell by 1 million barrels to 370.1 million in the seven days ended Dec. 28, according to the median of 10 analyst estimates. That would be a third weekly decline and the sixth drop in seven weeks.
Enterprise Products Partners LP (EPD) and Enbridge Inc. (ENB) plan to resume service on the 500-mile (805-kilometer) Seaway oil pipeline at full rates next week after more than doubling the line’s capacity.
Seaway, which runs from Cushing, Oklahoma, to Freeport, Texas, may reduce a glut in the U.S. Midwest and shrink imports to the Gulf Coast, home to about half of the country’s refining facilities. Supplies at Cushing, the delivery point for WTI futures, rose to a record 49.2 million barrels on Dec. 21, Energy Department data show.
Prices may rise next week on speculation that stronger economic growth will boost fuel demand, a Bloomberg survey showed. Fourteen of 24 analysts and traders, or 58 percent, forecast crude will increase through Jan. 11. Five respondents, or 21 percent, predicted a drop. Five said there would be little change.